Taxes

If Congress Calls It a Tax and It's Enforced Like a Tax…

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In my column today, I note that the Senate Finance Committee's health care bill calls the penalty for failing to buy medical insurance an "excise tax." A.P. points out that the House health care bill calls its penalty a "tax on individuals without acceptable health care coverage." A.P. also quotes experts who note that the method of collecting the money reinforces the language used by Congress:

"If you put something in the Internal Revenue Code, and you tell the IRS to collect it, I think that's a tax," said Clint Stretch, head of the tax policy group for Deloitte, a major accounting firm. "If you don't pay, the person who's going to come and get it is going to be from the IRS."…

"The fact that it is imposed on people and they have no choice in paying it, and the fact that it's administered through the tax system all make it look like a tax," [Roberton] Williams [of the Tax Policy Center] said.

President Obama, loath to admit he has forsaken his "firm pledge" not to raise taxes on middle-income Americans, nevertheless insists these financial penalties are not taxes:

The White House on Monday reiterated that it doesn't view the fee as a tax. Officials said Americans are already paying as much as $1,000 a year in higher medical costs to subsidize caring for the uninsured, and would save money if lawmakers pass the health overhaul. They noted that lower-income people would get federal help to buy insurance and avoid the penalty.

"People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school," said White House spokeswoman Linda Douglass. "A fee would only be imposed on those few who could afford to purchase insurance, but refuse to do so."

These points seem irrelevant to the issue the White House is ostensibly addressing. First, the requirement to buy insurance can itself be fairly described as a tax: a state-compelled payment of money in exchange for a state-subsidized benefit. (According to A.P., the Tax Policy Center's Williams "sees no distinction between the requirement to get coverage and the fines themselves.") Second, the fact that you can avoid a tax by changing your behavior does not mean it is not a tax. You don't pay gasoline taxes if you don't buy gasoline, you don't pay property taxes if you don't own real estate, and you don't pay income taxes if you don't earn income. Does that mean these are not taxes either? 

It's fun to watch Obama squirm as he tries to avoid admitting that his campaign promise is null and void. But that's not the only reason to take an interest in this issue. If these penalties are not taxes, what they hell are they? Civil penalties? Criminal fines? Either of those alternatives would make collecting them more complicated and provide the people subject to them with more opportunity to resist. Which is presumably why Congress decided to call them taxes.  

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  1. Sorry to threadjack before the thread is even started, but here’s a fun little piece where John Cochrane takes Paul Krugman down to size and calls him a wannabe “Rush Limbaugh of the left.”

  2. To be fair, he only promised to not raise taxes by a single dime. $3800 is not a dime.

  3. “Read My Lips…”

    Oh yeah, he’s going down in 2012.

  4. All of this is ridiculously impertinent. Listen-up:

    The word “tax” is a euphemism. Do you understand? I don’t know who raised you people, but my parents taught me not to take things that belong to others.

    This destruction of the language has been a long time running, and I’m not feeling sorry for anyone.

  5. “People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school,” said White House spokeswoman Linda Douglass.

    And those are bullshit too. I just love it when these dipshits argue that new tyranny is OK because of old tyranny.

  6. They’re not tattoos! They’re body illustrations!

  7. ‘”People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school,” said White House spokeswoman Linda Douglass.’

    If you’re accused of driving on the roads in an uninsured vehicle, you get charged with a traffic offense and prosecuted in a criminal or quasi-criminal proceeding.

    If you’re accused of violating the school-attendance laws, you are subject to a criminal prosecution, or possibly a civil proceeding to take your kids away from you.

    If you’re accused of failing to buy health insurance under the bills which have been put forward, you face an administrative proceeding in the IRS which, coincidentally, is just like the proceedings the IRS uses against tax delinquents.

    If the penalty for not buying health insurance isn’t a tax, then those accused should get a criminal trial, or a civil or quasi-criminal hearing, in court.

  8. What I just don’t understand is why conservatives aren’t pushing the primary reason for interstate purchase of insurance – currently if we move out of a state, we have to get new insurance to cover us. Thus we have to reapply, and potentially get rejected for “pre-existing conditions.” Same problem with employer-based insurance – lose your job, you have to reapply for new insurance. If we bought into a private plan that was valid regardless of which state we lived in, we’d never need to change insurance companies or plans and thus would never need to reapply and potentially come in conflict with “pre-existing condition” issues. They should stop just talking about how beneficial for competitions it is (which it is) but start emphasizing that Obama and the Democrats are inexplicably ignoring the easiest way to prevent denial of coverage.

  9. new tyranny is OK because of old tyranny.

    Well…spluh!

    If the penalty for not buying health insurance isn’t a tax, then those accused should get a criminal trial, or a civil or quasi-criminal hearing, in court.

    I eagerly await the hordes of false positives that will be coming down the pike, where people with insurance will be fined because couldn’t prove they had insurance in that very special IRS way, or filled out the wrong form, or submitted it late, or, the most likely answer, is that IRS employees are largely fuckups and will just screw up a legitimate record and fine away without bothering to check, just like my DMV (which won’t literally fine me, but will void or hold up my registration renewal.)

  10. Call it what it really is: A head tax. Also called a poll tax. Every individual pays the same, regardless of income. Surprising coming from someone who supposedly favors progressive taxation.

  11. How many legs does a dog have if you call the tail a leg?

    Four.

    Calling a tail a leg doesn’t make it a leg.

  12. EOM

  13. “What I just don’t understand is why conservatives aren’t pushing the primary reason for interstate purchase of insurance – currently if we move out of a state, we have to get new insurance to cover us.”

    Funny you should bring this up. Just this morning Joe (of MSNBC’s Morning Joe Show” asked David Axelrod why don’t we lift the restictions barring insurance companies from selling across state lines. He said (and oh how I’d like to cock-punch him for it) that…wait for it… it would be too complicated.

  14. Am I the only one that thinks that if he’s gonna spend an assload of cash, I’d rather have him tax for it than borrow it?

  15. (Note: If you don’t like the IRS’s assessment, you *can* take your case to court, but the initiative rests with you, and in certain cases, the judges defer to the IRS bureaucrats.)

  16. I think calling it a fine is more accurate than calling it a tax. If I’m understanding correctly, the broad strokes are: if we catch you failing to comply with this law, then you must pay a fixed amount of money. Name another tax that works like that. I can name some fines that work like that.

  17. I’d rather have him tax for it than borrow it?

    And the difference is? If you buy something with cash or pay for it with a credit card you pay off at the end of the month, you’ve still spent the money anyway.

    If Obama is worried about paying for it, cut spending enough to pay for it. We’d still be taxed at theft levels, but at least not taxed additionally.

  18. Am I the only one that thinks that if he’s gonna spend an assload of cash, I’d rather have him tax for it than borrow it?
    I’m wondering where he is going to come up with the money to cover the “tax credit” he keeps throwing about.

  19. “People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school,” said White House spokeswoman Linda Douglass. “A fee would only be imposed on those few who could afford to purchase insurance, but refuse to do so.”

    I hope Xeones has something to say about Linda Douglass.

    Also (threadjacking), y’all may be interested in Sarah Palin’s recent comments on health care:

    Real health-care reform is market oriented, patient centered and result driven. It would give all individuals the same tax benefit, that an ideal plan that I would have in mind, same tax benefits as those who get coverage through their employers. And give Medicare recipients vouchers so that they can buy their own coverage. And reform tort laws and change regulations to allow people to buy insurance across state lines. Rather than another top down government plan, we should give Americans themselves control over their own health care with market friendly responsible ideas.

    I am already getting slightly nauseated with the idea that I might have to vote for this lady who can’t properly form an English sentence.

  20. “If you buy something with cash or pay for it with a credit card you pay off at the end of the month…”

    You’re assuming that we pay it off. I’m assuming we’ll keep borrowing ’til they crash the currency. Me, I’d rather live in a highly taxed state with stable capital. I’m funny that way.

  21. Why isn’t anyone calling for an across the board reduction in the size of government, or elimination of complete departments, to accommodate a nationalized health care plan which is paid for by the savings?

    I guess that would be too easy.

  22. “People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school,” said White House spokeswoman Linda Douglass.

    Has anybody pointed out to Linda Douglass yet that the federal government does not require either of these things?

  23. People are inordinately focused on the “fine” aspect. It’s a government compulsion to spend money, that’s a tax. If you have to spend it and criminal liability attaches (not civil) if you don’t, it’s a tax no matter what you call it.

    The obvious difference with car insurance is that not everyone has to have it, and the intent of car insurance is to protect others, not yourself.

  24. I’d rather live in a country with a commitment not to steal stuff from some for the benefit of others.

  25. I hope Xeones has something to say about Linda Douglass.

    Yo, Linda Douglass doesn’t seem to be the sharpest knife in the drawer.

  26. Yo, Linda Douglass doesn’t seem to be the sharpest knife in the drawer.

    Or the brightest bulb in the string.
    Or the quickest dog at the track.

    Any others out there?

  27. Funny you should bring this up. Just this morning Joe (of MSNBC’s Morning Joe Show” asked David Axelrod why don’t we lift the restictions barring insurance companies from selling across state lines. He said (and oh how I’d like to cock-punch him for it) that…wait for it… it would be too complicated.

    Considering that MSNBC is in the tank for Obama, and the host likely offered a helpful suggestion, and yet Axelrod could not give an explanation…

  28. “People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school,” said White House spokeswoman Linda Douglass.

    All States do not require vehicle insurance and many “allow” home schooling. What backwards part of the country is this woman from? Manhattan?

  29. To borrow a phrase beloved by the Democratic Party: these fees are simply an “unfunded mandate.”

  30. Or the crunchiest chip in the bag.

  31. Why isn’t anyone calling for an across the board reduction in the size of government, or elimination of complete departments, to accommodate a nationalized health care plan which is paid for by the savings?

    What?! And throw even *more* folks onto the unemployment lines?!

  32. “””What backwards part of the country is this woman from? Manhattan?”””

    Why would you say that? Most people who live in Manhattan don’t have car insurance, nor do they have a car.

  33. “””All States do not require vehicle insurance and many “allow” home schooling.””

    Not to mention, that no state requires all it’s citizens to get vehicle insurance, some states require it for those who own a car.

    Home schooling is still school, so she isn’t so wrong on that point.

  34. Home schooling is still school, so she isn’t so wrong on that point.

    I don’t know, the school part of the analogy still seems really weak to me; Obama isn’t trying to force us (as far as I know…) to go to the doctor once a year, just to pay for it. And we all pay for schools…with tax dollars.

  35. Obama’s pledge on taxes aside, what about his antics during the Democratic primaries?

    We Yanqui seem to have short attention spans. On many occasions the Hillbilly vs. Uncle Obama smackdown was about their respective socialist medical schemes. But it was Hillary who wanted to soak everyone a fine/tax/mugging if they were a wayward Kulak from the collective farm.

    Obama didn’t want the Dr. Nanny tax, and on several occasions he – in no uncertain terms if I remember – put the hate on the idea. Why hasn’t anyone dug up these old videos with him mocking the Hillbilly for her crazy schemes?

    After all, he seems to have embraced some of the worst ideas from the Hillbilly camp and used them as ingredients in his own socialist shit-sandwich.

  36. Am I the only one that thinks that if he’s gonna spend an assload of cash, I’d rather have him tax for it than borrow it?

    I hope so.I’d much rather the government borrow, rather than tax, for all it’s programs.When they miss a payment the Rent To Own truck can pull up and repo all that shiny stuff.

  37. Am I the only one that thinks that if he’s gonna spend an assload of cash, I’d rather have him tax for it than borrow it?

    I’m with you 100% (although would still prefer spending cuts). Debt is more expensive than paying up front. If they print money, they cause inflation. Inflation disproportionately impacts the poor in a negative fashion, thus government-generated inflation is really a tax on the poor. In my opinion, the order of precedence for paying for government should be – offset by spending cuts, then tax and then go into debt only if an emergency. I’m not the kind of libertarian who believes that going broke and having China breathing down our necks will bring about a libertarian utopia.

  38. Calling it a tax rather than a fine is probably worse in one way – taxpayers have fewer due process rights when they face the IRS than a criminal has in a court.

  39. A fine is imposed by a court or other tribunal after notice and opportunity for hearing because a person did (or didn’t do) some action prohibited by law. A person does not owe the government money for the fine until after court imposes it.

    A tax is imposed a specific action or transaction and is owed at the time a person engages in that action or transaction. The government doesn’t need to first take you to court to establish that you did that thing, and then ask the court to impose the tax. If you do not pay, the government can take you to court FOR FAILING TO PAY, not FOR DOING THE ACT.

  40. “Considering that MSNBC is in the tank for Obama, and the host likely offered a helpful suggestion, and yet Axelrod could not give an explanation…”

    The host in question is a former Republican congressman. If he’s in the tank for Obama, the GOP is really going down the tubes.

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